Inter-regional spillover effects in New Zealand international tourism demand

Abstract

In this paper, we have investigated the linkages between the international tourism demands across tourism regions in New Zealand. The big portion of the international tourists is visiting the big hubs of the New Zealand (namely, Auckland, Wellington and Christchurch). However, big bulks of the tourists are also visiting the other parts of New Zealand as well. However, it is not certain whether the tourists visiting other regions are spilled over from these big hubs or they visit these regions as the main destination. To investigate this question, we examined the impact of the spillovers from these hubs to other regions of New Zealand. We employed a multivariate AR-GARCH model to estimate the spillover effects for both New Zealand's North Island and South Island regions. In particular, we quantified and compared the magnitudes of the main hubs on the volatility of the international tourism demand of the other regions. We found that the spillovers from the main centres are by and large important for a number of Regional Tourism Organisations (RTOs), thereby suggesting that both expected guest night and volatility spillovers are important in explaining New Zealand's international hotel guest nights. We also quantified that, on average, 52% of the volatility in a South region tourism demand is explained by the volatility in tourism demand of Christchurch, whereas this rate is much lower in North Island which is around 25%. However, this is quite an evidence for the integration of the international tourism demand spillovers among New Zealand regions.